Correlation Between TAL Education and Automatic Data
Can any of the company-specific risk be diversified away by investing in both TAL Education and Automatic Data at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TAL Education and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and Automatic Data Processing, you can compare the effects of market volatilities on TAL Education and Automatic Data and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TAL Education with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Automatic Data.
Diversification Opportunities for TAL Education and Automatic Data
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TAL and Automatic is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and TAL Education is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TAL Education Group are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of TAL Education i.e., TAL Education and Automatic Data go up and down completely randomly.
Pair Corralation between TAL Education and Automatic Data
Assuming the 90 days trading horizon TAL Education is expected to generate 5.07 times less return on investment than Automatic Data. In addition to that, TAL Education is 3.64 times more volatile than Automatic Data Processing. It trades about 0.01 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.18 per unit of volatility. If you would invest 22,351 in Automatic Data Processing on September 3, 2024 and sell it today you would earn a total of 6,759 from holding Automatic Data Processing or generate 30.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Automatic Data Processing
Performance |
| Timeline |
| TAL Education Group |
| Automatic Data Processing |
TAL Education and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Automatic Data
The main advantage of trading using opposite TAL Education and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Automatic Data can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Automatic Data will offset losses from the drop in Automatic Data's long position.| TAL Education vs. Caltagirone SpA | TAL Education vs. Compagnie Plastic Omnium | TAL Education vs. Steel Dynamics | TAL Education vs. Goodyear Tire Rubber |
| Automatic Data vs. DFS Furniture PLC | Automatic Data vs. KOOL2PLAY SA ZY | Automatic Data vs. ITALIAN WINE BRANDS | Automatic Data vs. ePlay Digital |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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